How often have you heard that it’s all about understanding the client’s needs and motivations? Almost so much that it starts to become cliché.  Unfortunately, the cliché is true.

What we at Engel & Völkers understand about the ultra-high net worth client is the importance of this mantra: it all comes down to determining the motivations of our clients to help them invest. When we consider an UHNW individual, the preliminary stage is to make sure the investment is the right size.

Offering a parcel of land worth $20,000 which could double in value is quite irrelevant to our UHNW clients, as the impact on their balance sheet is negligible. But a $100 million-property yielding 10 per cent in the centre of a major city with capital gains? That is more appealing. Now, understanding an UHNW client’s needs is ultimately important, but not excessively difficult; customising that understanding is the real challenge.

Customisation in the luxury market in general is about delivering something truly unique. It appeals to the pleasure and security of owning something that no one else has; it projects a certain exclusive image; it is an extension of someone’s personal and professional brand.

Whether we are talking about a Powder Blue Rolls Royce or an individually tailored suit from Ascot Chang, the same sort of desirable customisation lends itself to luxury property. Property, land, and title of course have a store of monetary value set by the market; what makes them investments and not just residences for UHNW clients are the emotional values of personal image, brand and legacy that are attached to the property.

In a world of unlimited possibilities, how do we help investors make the right choice? My advice to investors is guided by their answer to questions that start with “Why?” Why are you investing? Why that location? Why now? Their responses reveal what are the key considerations – if health and environment are the most important, if comfort is the most important, if image is the most important.

And for some clients, investing in real estate is about investing in a secure future. Here, price becomes a secondary motivation; knowing that the future of your family is secured is worth any premium that may be attached.

Go Long

For serious investors, you must look at long-term trends. When an asset or building becomes a distressed sale, having the preparation and confidence to step in and acquire the asset is the most important consideration for UHNW clients.

From an investment perspective, looking at broader trends minimises the risk of property investment. For example, while it may come as a surprise to some, Spain is actually an attractive market because of its clearing prices and high unemployment rate; when Spain starts to recover, property values will benefit. In other parts of the world, the US has moved off its lows, and the favourable trading positions of Germany and Hong Kong with China give confidence to generating meaningful returns.

An investment thesis

One thing remains certain in the face of price volatility and uncertain economic futures: aspirational homes and unique offerings will always be in high demand. The luxury sector, largely dominated by luxury real estate, is growing at 8 per cent per annum, faster than the GDP growth of developed countries.  This investment thesis presents many opportunities for UHNW clients to not only establish long term gains, but to develop the right image and long-standing legacy.

Understanding all the combinations of monetary, emotional and aspirational factors is central to our beliefs about property investing for ultra-high net worth clients and central to the value that we provide them. Creating these possibilities for our UHNW clients and helping them understand what the value of each property means to them individually is timeless, and it all comes down to the basics: understanding their needs.